(Reuters) – Iraqi Kurdistan announced deals worth $110 billion over their lifetime with U.S. firms HKN Energy and WesternZagros on Tuesday, drawing swift opposition from Baghdad’s oil ministry which deemed them “null and void”.
Prime Minister Masrour Barzani announced the deals in a speech in Washington, a day after they were flagged by an adviser on social media.
“The regional government is fully committed to developing the energy sector, especially as our reforms represent a significant step towards securing round-the-clock electricity supplies for all residents…We also hope to contribute to providing electricity to other areas in Iraq,” Barzani said, according to a statement released by the Kurdistan government.
The deals involve the development of the Miran and Topkhana-Kurdamir gas fields in the northern Iraqi city of Sulaimaniya.
“These contracts are null and void. Natural resources belong to all Iraqis, and any agreement to invest in them must be made through the federal government, not in defiance of the law and the constitution,” Iraq’s oil ministry said.
Control over oil and gas has long been a source of tension between Baghdad and Erbil.
In a ruling issued in 2022, Iraq’s federal court deemed an oil and gas law regulating the oil industry in Iraqi Kurdistan unconstitutional and demanded that Kurdish authorities hand over their crude oil supplies.
The Kurdish region’s Ministry of Natural Resources issued a statement in response to the Iraqi oil ministry asserting its right and authority to sign energy deals.
“These deals are based on contracts signed many years ago, which have also been upheld as legal and valid by Iraqi courts… The recent change has been in the operating companies, in accordance with the legal and contractual framework of the existing agreements,” it said.
An oil ministry official said agreement signings in Washington were conducted without Baghdad’s previous knowledge.
“Signing energy agreements without consulting with the central government will further complicate relations between Baghdad and Erbil and will impact efforts to resume the export of Kurdistan regional oil,” said a senior oil ministry official, speaking on condition of anonymity.
Key to those exports is a pipeline running through Turkey halted since March 2023 after the Paris-based International Chamber of Commerce ruled Ankara violated provisions of a 1973 treaty by facilitating Kurdish exports without Baghdad’s consent.
Negotiations to resume Kurdish oil exports via the Iraq-Turkey oil pipeline, which once handled about 0.5% of global oil supply, have stalled over payment terms and contract details.
Foreign energy companies have demanded clarification on repayment of debts accumulated between 2022 and 2023 and have and have sought contract guarantees, according to Iraqi and Iraqi Kurdish officials.
Reporting by Tala Ramadan, Nayera Abdallah and Ahmed Rasheed in Baghdad; editing by Hugh Lawson and Jason Neely
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